New merger review thresholds introduced for 2019: the Competition Act and Investment Canada Act
Energy Newsletter - May 2019
The threshold for pre-closing merger notification under the Competition Act and certain thresholds for pre-closing foreign investment reviews under the Investment Canada Act have been adjusted for inflation for 2019.
The "transaction size" threshold has increased from $92 million to $96 million.
Transactions that exceed both the (i) party-size threshold, and (ii) transaction-size threshold, require pre-closing merger notification to the Competition Bureau before they can close.
Party Size Threshold: the parties, together with their affiliates, have assets in Canada, or gross revenue from sales in, from, or into Canada, that exceed $400 million in aggregate value. This threshold is not subject to inflation adjustment.
Transaction Size Threshold: for an acquisition of assets, the aggregate value of the assets being acquired, or the gross revenue from sales in or from Canada generated from those assets, exceeds $96 million (for 2019).
The filing fee for pre-merger notification has increased from $72,000 to $73,584.
Investment Canada Act
An acquisition of control of a Canadian business by a non-Canadian is either notifiable or reviewable under the Investment Canada Act.
The "world trade organization (WTO) investors", "trade agreement investors" and "WTO state-owned enterprise (SOE) investors" thresholds for net benefit review have also increased.
WTO (non-SOE) Investors: the threshold for direct acquisitions of control of a Canadian business (other than a cultural business), by a non-SOE WTO investor has increased from $1 billion to $1.045 billion, in either enterprise or acquisition value, depending on the nature of the Canadian business and transaction.
Trade Agreement Investors: the threshold for direct acquisitions of control of a Canadian business (other than a cultural business), by a trade agreement investor has increased from $1.5 billion to $1.568 billion, in either enterprise or acquisition value, depending on the nature of the Canadian business and transaction.
SOE WTO Investors: the threshold for direct acquisitions of a Canadian business (other than a cultural business), by SOE investors has increased from $398 million to $416 million, calculated on the basis of the aggregate book value of the assets being acquired (as determined by the most recently completed audited financial statements).
The thresholds for non-WTO investors and acquisitions of cultural businesses remain static at $5 million in asset value for direct investments and $50 million in asset value for indirect transactions.